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LiveRamp Announces Second Quarter Results

November 6, 2019 4:05 PM

Total Revenue Increased 39% – Subscription Revenue Up 31%

Over $100 Million of Stock Repurchased Fiscal Year To Date

Raises Full Year Revenue Guidance

SAN FRANCISCO--(BUSINESS WIRE)-- LiveRamp® (NYSE: RAMP), the trusted platform that makes data accessible and meaningful, today announced its financial results for the second quarter ended September 30, 2019.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20191106005973/en/

Financial Highlights

“The quality of our quarter again demonstrates LiveRamp’s importance in the ecosystem,” said LiveRamp CEO Scott Howe. “Today, we work with 720 direct enterprise customers and serve thousands of additional companies through our partner network. We power more than 550 integrations and, with Data Plus Math, are providing a new way to buy, sell and measure advanced TV.”

“This was another outstanding quarter, fueled by record bookings and accelerating top-line growth,” said LiveRamp President and CFO Warren Jenson. “Our forward growth metrics remain strong: ARR exiting Q2 was up 40% year-over-year, and our Marketplace business grew by more than 80%. Added together, our business continues to demonstrate its strength and durability. In addition, the acquisition of Data Plus Math is already paying dividends. LiveRamp TV was up more than 70% year-over-year.”

GAAP and Non-GAAP Results

The following table summarizes the Company’s financial results for its second fiscal quarter ($ in millions):

Q2 Fiscal 2020

Q2 Fiscal 2019

Results

Results

GAAP

Non-GAAP

GAAP

Non-GAAP

Subscription revenue

$72

--

$55

--

YoY change %

31%

30%

Marketplace & other revenue

$18

--

$10

--

YoY change %

83%

(15%)

Total revenue

$90

--

$65

--

YoY change %

39%

20%

Gross profit

$49

$56

$40

$45

% Gross margin

54%

63%

62%

69%

YoY change, pts

(8 pts)

(6 pts)

7 pts

1 pt

Operating loss

($50)

($20)

($38)

($14)

% Operating margin

(56%)

(22%)

(59%)

(22%)

YoY change, pts

3 pts

- pt

12 pts

(2) pts

Net loss1

($40)

($15)

($41)

($11)

YoY change %

nm

nm

nm

nm

Loss per share1

($0.59)

($0.23)

($0.53)

($0.14)

YoY change %

nm

nm

nm

nm

Shares to Calculate EPS

67.7

67.7

77.4

77.4

YoY change %

(13%)

Net operating cash flow

($29)

--

($27)

--

YoY change %

nm

--

nm

--

Free cash flow to equity

--

($31)

--

($32)

YoY change %

--

nm

--

nm

1 From continuing operations, does not include AMS results.

Totals may not sum due to rounding.

A detailed discussion of our non-GAAP financial measures and a reconciliation between GAAP and non-GAAP results is provided in the schedules to this press release.

Additional Metrics & Highlights

Financial Outlook

LiveRamp’s non-GAAP guidance excludes the impact of non-cash stock compensation, purchased intangible asset amortization, and restructuring charges.

For fiscal 2020, LiveRamp now expects to report:

The Company’s guidance includes the Data Plus Math acquisition. GAAP and non-GAAP operating loss guidance also includes $11 million of transition-related spend in the first half of the fiscal year associated with establishing standalone operations at LiveRamp.

Conference Call

LiveRamp will hold a conference call at 1:30 p.m. PT today to further discuss this information. Interested parties are invited to listen to the call which will be broadcast via the Internet and can be found on LiveRamp’s investor site. A slide presentation will be referenced during the call and can be accessed here.

About LiveRamp

LiveRamp provides the identity platform leveraged by brands and their partners to deliver innovative products and exceptional experiences. LiveRamp’s IdentityLink™ connects people, data, and devices across the digital and physical world, powering the people-based marketing revolution and allowing consumers to safely connect with the brands and products they love. For more information, visit www.LiveRamp.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended (the “PSLRA”). These statements, which are not statements of historical fact, may contain estimates, assumptions, projections and/or expectations regarding the Company’s financial position, results of operations, market position, product development, growth opportunities, economic conditions, and other similar forecasts and statements of expectation. Forward-looking statements are often identified by words or phrases such as “anticipate,” “estimate,” “plan,” “expect,” “believe,” “intend,” “foresee,” or the negative of these terms or other similar variations thereof.

These forward-looking statements are not guarantees of future performance and are subject to a number of factors and uncertainties that could cause the Company’s actual results and experiences to differ materially from the anticipated results and expectations expressed in the forward-looking statements.

Among the factors that may cause actual results and expectations to differ from anticipated results and expectations expressed in forward-looking statements relate to the Company’s dependence upon customer renewals; new customer additions and upsell within our subscription business; our reliance upon partners including data suppliers; competition; and attracting and retaining talent. Additional risks relate to maintaining our culture and our ability to innovate and evolve within a rapidly changing industry including digital advertising, while also avoiding disruption from acquisition and divestiture activities. Our international operations are also subject to risks that may harm the Company’s business. The risk of a significant breach of the confidentiality of the information or the security of our or our customers’, suppliers’, or other partners’ computer systems could be detrimental to our business, reputation and results of operations. Other business risks include unfavorable publicity and negative public perception about our industry; interruptions or delays in service from data center hosting vendors we rely upon; and our dependence on the continued availability of third-party data hosting and transmission services. Our clients’ ability to use data on our platform could be restricted if the industry’s use of third-party cookies and tracking technology declines due to technology platform changes, regulation or increased user controls. Changes in regulations relating to information collection represents a risk, as well as changes in tax laws and regulations that are applied to our customers which could cause enterprise software budget tightening. In addition, third parties may claim that we are infringing their intellectual property or may infringe our intellectual property which could result in competitive injury and / or the incurrence of significant costs and draining of our resources.

For a discussion of these and other risks and uncertainties, please refer to LiveRamp’s Annual Report on Form 10-K for our fiscal year 2019 ended March 31, 2019.

The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in LiveRamp’s Quarterly Report on Form 10-Q for the period ended September 30, 2019, which LiveRamp expects to file on November 6, 2019.

LiveRamp assumes no obligation and does not currently intend to update these forward-looking statements.

To automatically receive LiveRamp financial news by email, please visit www.LiveRamp.com and subscribe to email alerts.

LiveRampⓇ, IdentityLinkTM, AbilitecⓇ, Safe HavenⓇ and all other LiveRamp marks contained herein are trademarks or service marks of LiveRamp, Inc. All other marks are the property of their respective owners.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the Three Months Ended

September 30,

$

%

2019

2018

Variance

Variance

Revenues

90,143

64,812

25,331

39.1

%

Cost of revenue

41,460

24,466

16,994

69.5

%

Gross profit

48,683

40,346

8,337

20.7

%

% Gross margin

54.0

%

62.3

%

Operating expenses:
Research and development

26,445

16,940

9,505

56.1

%

Sales and marketing

45,204

35,940

9,264

25.8

%

General and administrative

27,262

25,176

2,086

8.3

%

Gains, losses and other items, net

45

489

(444

)

(90.8

%)

Total operating expenses

98,956

78,545

20,411

26.0

%

Loss from operations

(50,273

)

(38,199

)

(12,074

)

(31.6

%)

% Margin

-55.8

%

-58.9

%

Total other income (expense)

4,780

(281

)

5,061

1801.1

%

Loss from continuing operations before income taxes

(45,493

)

(38,480

)

(7,013

)

(18.2

%)

Income taxes (benefit)

(5,291

)

2,700

(7,991

)

(296.0

%)

Net loss from continuing operations

(40,202

)

(41,180

)

978

2.4

%

Earnings from discontinued operations, net of tax

-

61,803

(61,803

)

(100.0

%)

Net earnings (loss)

(40,202

)

20,623

(60,825

)

(294.9

%)

Basic earnings (loss) per share:
Continuing operations

(0.59

)

(0.53

)

(0.06

)

(11.7

%)

Discontinued operations

-

0.80

(0.80

)

(100.0

%)

Net earnings (loss)

(0.59

)

0.27

(0.86

)

(323.1

%)

Diluted earnings (loss) per share:
Continuing operations

(0.59

)

(0.53

)

(0.06

)

(11.7

%)

Discontinued operations

-

0.80

(0.80

)

(100.0

%)

Net earnings (loss)

(0.59

)

0.27

(0.86

)

(323.1

%)

Basic weighted average shares

67,684

77,448

Diluted weighted average shares

67,684

77,448

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the Six Months Ended

September 30,

$

%

2019

2018

Variance

Variance

Revenues

172,654

127,283

45,371

35.6

%

Cost of revenue

77,886

48,120

29,766

61.9

%

Gross profit

94,768

79,163

15,605

19.7

%

% Gross margin

54.9

%

62.2

%

Operating expenses:
Research and development

50,167

33,910

16,257

47.9

%

Sales and marketing

88,348

69,263

19,085

27.6

%

General and administrative

52,580

43,301

9,279

21.4

%

Gains, losses and other items, net

2,321

490

1,831

373.7

%

Total operating expenses

193,416

146,964

46,452

31.6

%

Loss from operations

(98,648

)

(67,801

)

(30,847

)

(45.5

%)

% Margin

-57.1

%

-53.3

%

Total other income

10,662

75

10,587

14116.0

%

Loss from continuing operations before income taxes

(87,986

)

(67,726

)

(20,260

)

(29.9

%)

Income taxes (benefit)

(5,644

)

1,272

(6,916

)

(543.7

%)

Net loss from continuing operations

(82,342

)

(68,998

)

(13,344

)

(19.3

%)

Earnings from discontinued operations, net of tax

-

86,606

(86,606

)

(100.0

%)

Net earnings (loss)

(82,342

)

17,608

(99,950

)

(567.6

%)

Basic earnings (loss) per share:
Continuing operations

(1.21

)

(0.89

)

(0.31

)

(34.9

%)

Discontinued operations

-

1.12

(1.12

)

(100.0

%)

Net earnings (loss)

(1.21

)

0.23

(1.43

)

(628.6

%)

Diluted earnings (loss) per share:
Continuing operations

(1.21

)

(0.89

)

(0.31

)

(34.9

%)

Discontinued operations

-

1.12

(1.12

)

(100.0

%)

Net earnings (loss)

(1.21

)

0.23

(1.43

)

(628.6

%)

Basic weighted average shares

68,295

77,192

Diluted weighted average shares

68,295

77,192

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP EPS (1)

(Unaudited)

(Dollars in thousands, except per share amounts)

For the Three Months Ended

For the Six Months Ended

September 30,

September 30,

2019

2018

2019

2018

Loss from continuing operations before income taxes

(45,493

)

(38,480

)

(87,986

)

(67,726

)

Income taxes (benefit)

(5,291

)

2,700

(5,644

)

1,272

Net loss from continuing operations

(40,202

)

(41,180

)

(82,342

)

(68,998

)

Earnings from discontinued operations, net of tax

-

61,803

-

86,606

Net earnings (loss)

(40,202

)

20,623

(82,342

)

17,608

Earnings (loss) per share:
Basic

(0.59

)

0.27

(1.21

)

0.23

Diluted

(0.59

)

0.27

(1.21

)

0.23

Excluded items:
Purchased intangible asset amortization (cost of revenue)

5,369

3,548

8,492

9,518

Non-cash stock compensation (cost of revenue and operating expenses)

23,354

17,667

41,984

35,465

Accelerated depreciation (cost of revenue and operating expenses)

1,663

-

3,569

-

Restructuring and merger charges (gains, losses, and other)

45

489

2,321

490

Separation and transformation costs (general and administrative)

-

2,122

-

2,122

Total excluded items, continuing operations

30,431

23,826

56,366

47,595

Loss from continuing operations before income taxes and excluding items

(15,062

)

(14,654

)

(31,620

)

(20,131

)

Income taxes (benefit) (2)

190

(3,790

)

(26

)

(4,868

)

Non-GAAP net loss from continuing operations

(15,252

)

(10,864

)

(31,594

)

(15,263

)

Non-GAAP loss per share from continuing operations:
Basic

(0.23

)

(0.14

)

(0.46

)

(0.20

)

Diluted

(0.23

)

(0.14

)

(0.46

)

(0.20

)

Basic weighted average shares

67,684

77,448

68,295

77,192

Diluted weighted average shares

67,684

77,448

68,295

77,192

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.

(2) Income taxes were calculated using an effective non-GAAP tax rate of 1.2% and 25.9% in the second quarter of fiscal 2020 and 2019, respectively, and 0.0% and 24.2% for the six months ended September 30, 2019 and 2018, respectively. The difference between our GAAP and non-GAAP tax rates were primarily due to the net tax effects of the excluded items.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP LOSS FROM OPERATIONS (1)

(Unaudited)

(Dollars in thousands)

For the Three Months Ended

For the Six Months Ended

September 30,

September 30,

2019

2018

2019

2018

Loss from continuing operations

(50,273

)

(38,199

)

(98,648

)

(67,801

)

Excluded items:
Purchased intangible asset amortization (cost of revenue)

5,369

3,548

8,492

9,518

Non-cash stock compensation (cost of revenue and operating expenses)

23,354

17,667

41,984

35,465

Accelerated depreciation (cost of revenue and operating expenses)

1,663

-

3,569

-

Restructuring and merger charges (gains, losses, and other)

45

489

2,321

490

Separation and transformation costs (general and administrative)

-

2,122

-

2,122

Total excluded items

30,431

23,826

56,366

47,595

Loss from continuing operations before excluded items

(19,842

)

(14,373

)

(42,282

)

(20,206

)

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED EBITDA (1)

(Unaudited)

(Dollars in thousands)

For the Three Months Ended

For the Six Months Ended

September 30,

September 30,

2019

2018

2019

2018

Net loss from continuing operations

(40,202

)

(41,180

)

(82,342

)

(68,998

)

Income taxes (benefit)

(5,291

)

2,700

(5,644

)

1,272

Other income (expense)

(4,780

)

281

(10,662

)

(75

)

Loss from operations

(50,273

)

(38,199

)

(98,648

)

(67,801

)

Depreciation and amortization

10,977

7,010

19,854

16,540

EBITDA

(39,296

)

(31,189

)

(78,794

)

(51,261

)

Other adjustments:
Non-cash stock compensation (cost of revenue and operating expenses)

23,354

17,667

41,984

35,465

Restructuring and merger charges (gains, losses, and other)

45

489

2,321

490

Separation and transformation costs (general and administrative)

-

2,122

-

2,122

Other adjustments

23,399

20,278

44,305

38,077

Adjusted EBITDA

(15,897

)

(10,911

)

(34,489

)

(13,184

)

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

September 30,

March 31,

$

%

2019

2019

Variance

Variance

Assets
Current assets:
Cash and cash equivalents

777,443

1,061,473

(284,030

)

(26.8

%)

Restricted cash

14,815

-

14,815

n/a

Trade accounts receivable, net

88,150

78,563

9,587

12.2

%

Refundable income taxes

15,676

7,890

7,786

98.7

%

Other current assets

51,055

44,150

6,905

15.6

%

Total current assets

947,139

1,192,076

(244,937

)

(20.5

%)

Property and equipment

64,440

64,852

(412

)

(0.6

%)

Less - accumulated depreciation and amortization

43,278

38,809

4,469

11.5

%

Property and equipment, net

21,162

26,043

(4,881

)

(18.7

%)

Software, net of accumulated amortization

27,413

6,861

20,552

299.5

%

Goodwill

297,477

204,656

92,821

45.4

%

Deferred income taxes

35

35

-

0.0

%

Deferred commissions, net

11,347

10,741

606

5.6

%

Other assets, net

58,657

32,499

26,158

80.5

%

1,363,230

1,472,911

(109,681

)

(7.4

%)

Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable

31,721

31,203

518

1.7

%

Accrued payroll and related expenses

16,716

18,715

(1,999

)

(10.7

%)

Other accrued expenses

55,724

40,916

14,808

36.2

%

Acquisition escrow payable

14,815

-

14,815

n/a

Deferred revenue

4,447

4,284

163

3.8

%

Total current liabilities

123,423

95,118

28,305

29.8

%

Deferred income taxes

1,500

39

1,461

3746.2

%

Other liabilities

51,949

46,922

5,027

10.7

%

Stockholders' equity:
Common stock

14,310

14,187

123

0.9

%

Additional paid-in capital

1,460,120

1,406,813

53,307

3.8

%

Retained earnings

1,587,263

1,669,605

(82,342

)

(4.9

%)

Accumulated other comprehensive income

6,619

7,801

(1,182

)

(15.2

%)

Treasury stock, at cost

(1,881,954

)

(1,767,574

)

(114,380

)

(6.5

%)

Total stockholders' equity

1,186,358

1,330,832

(144,474

)

(10.9

%)

1,363,230

1,472,911

(109,681

)

(7.4

%)

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

For the Three Months Ended

September 30,

2019

2018

Cash flows from operating activities:
Net earnings (loss)

(40,202

)

20,623

Earnings from discontinued operations, net of tax

-

(61,803

)

Non-cash operating activities:
Depreciation and amortization

10,977

7,010

Loss (gain) on disposal or impairment of assets

(225

)

490

Provision for doubtful accounts

1,468

1,095

Deferred income taxes

(5,090

)

14,136

Non-cash stock compensation expense

23,354

17,667

Changes in operating assets and liabilities:
Accounts receivable

(7,807

)

(1,797

)

Deferred commissions

(780

)

(1,049

)

Other assets

(7,497

)

1,838

Accounts payable and other liabilities

3,009

(8,880

)

Income taxes

(6,926

)

(14,518

)

Deferred revenue

968

(1,942

)

Net cash used in operating activities

(28,751

)

(27,130

)

Cash flows from investing activities:
Capitalized software

-

(423

)

Capital expenditures

(2,641

)

(1,323

)

Proceeds from sales of property and equipment

517

-

Cash paid in acquisition, net of cash received

(100,886

)

-

Net cash used in investing activities

(103,010

)

(1,746

)

Cash flows from financing activities:
Payments of debt

-

(2,701

)

Proceeds related to the issuance of common stock under stock and employee benefit plans

1,032

4,005

Shares repurchased for tax withholdings upon vesting of stock-based awards

(1,814

)

(4,580

)

Acquisition of treasury stock

(80,374

)

-

Net cash used in financing activities

(81,156

)

(3,276

)

Cash flows from discontinued operations:
From operating activities

-

34,135

From investing activities

-

(7,929

)

Effect of exchange rate changes on cash

-

(5

)

Net cash provided by discontinued operations

-

26,201

Effect of exchange rate changes on cash

(302

)

(557

)

Net change in cash, cash equivalents and restricted cash

(213,219

)

(6,508

)

Cash, cash equivalents and restricted cash at beginning of period

1,005,477

93,555

Cash, cash equivalents and restricted cash at end of period

792,258

87,047

Supplemental cash flow information:
Cash paid (received) during the period for:
Income taxes

6,042

(741

)

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

For the Six Months Ended

September 30,

2019

2018

Cash flows from operating activities:
Net earnings (loss)

(82,342

)

17,608

Earnings from discontinued operations, net of tax

-

(86,606

)

Non-cash operating activities:
Depreciation and amortization

19,854

16,540

Loss (gain) on disposal or impairment of assets

(140

)

475

Provision for doubtful accounts

2,430

631

Deferred income taxes

(5,083

)

12,444

Non-cash stock compensation expense

41,984

35,465

Changes in operating assets and liabilities:
Accounts receivable

(11,258

)

(2,649

)

Deferred commissions

(606

)

(2,047

)

Other assets

(3,897

)

1,264

Accounts payable and other liabilities

2,821

(4,604

)

Income taxes

(7,789

)

(16,416

)

Deferred revenue

(133

)

(1,515

)

Net cash used in operating activities

(44,159

)

(29,410

)

Cash flows from investing activities:
Capitalized software

-

(1,322

)

Capital expenditures

(7,529

)

(2,035

)

Proceeds from sales of property and equipment

517

-

Payments for investments

-

(2,500

)

Cash paid in acquisition, net of cash received

(105,365

)

-

Net cash used in investing activities

(112,377

)

(5,857

)

Cash flows from financing activities:
Payments of debt

-

(3,293

)

Fees from debt refinancing

-

(300

)

Proceeds related to the issuance of common stock under stock and employee benefit plans

2,092

8,121

Shares repurchased for tax withholdings upon vesting of stock-based awards

(13,907

)

(14,624

)

Acquisition of treasury stock

(100,473

)

(45,766

)

Net cash used in financing activities

(112,288

)

(55,862

)

Cash flows from discontinued operations:
From operating activities

-

54,316

From investing activities

-

(14,502

)

Effect of exchange rate changes on cash

-

(172

)

Net cash provided by discontinued operations

-

39,642

Effect of exchange rate changes on cash

(391

)

(1,484

)

Net change in cash, cash equivalents and restricted cash

(269,215

)

(52,971

)

Cash, cash equivalents and restricted cash at beginning of period

1,061,473

140,018

Cash, cash equivalents and restricted cash at end of period

792,258

87,047

Supplemental cash flow information:
Cash paid during the period for:
Income taxes

6,152

115

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CALCULATION OF FREE CASH FLOW TO EQUITY (1)

(Unaudited)

(Dollars in thousands)

06/30/18

09/30/18

12/31/18

03/31/19

FY2019

06/30/19

09/30/19

FY2020

Net Cash Provided by (Used in) Operating Activities-Continuing Operations

(2,280

)

(27,130

)

(10,922

)

38,354

(1,978

)

(15,408

)

(28,751

)

(44,159

)

Less (plus):
Capitalized software

(899

)

(423

)

-

-

(1,322

)

-

-

-

Capital expenditures

(712

)

(1,323

)

(1,938

)

(3,347

)

(7,320

)

(4,888

)

(2,641

)

(7,529

)

Required debt payments

(592

)

(2,701

)

-

-

(3,293

)

-

-

-

Free Cash Flow to Equity

(4,483

)

(31,577

)

(12,860

)

35,007

(13,913

)

(20,296

)

(31,392

)

(51,688

)

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share amounts)

Q2 FY20 to Q2 FY19

06/30/18

09/30/18

12/31/18

03/31/19

FY2019

06/30/19

09/30/19

FY2020

%

$

Revenues

62,471

64,812

80,021

78,316

285,620

82,511

90,143

172,654

40.5

%

25,331

Cost of revenue

23,654

24,466

34,838

37,760

120,718

36,426

41,460

77,886

71.8

%

16,994

Gross profit

38,817

40,346

45,183

40,556

164,902

46,085

48,683

94,768

21.5

%

8,337

% Gross margin

62.1

%

62.3

%

56.5

%

51.8

%

57.7

%

55.9

%

54.0

%

54.9

%

Operating expenses
Research and development

16,970

16,940

20,469

31,318

85,697

23,722

26,445

50,167

56.0

%

9,505

Sales and marketing

33,323

35,940

40,054

49,223

158,540

43,144

45,204

88,348

27.8

%

9,264

General and administrative

18,125

25,176

27,828

27,749

98,878

25,318

27,262

52,580

11.5

%

2,086

Gains, losses and other items, net

1

489

5,043

14,400

19,933

2,276

45

2,321

(44400.0

%)

(444

)

Total operating expenses

68,419

78,545

93,394

122,690

363,048

94,460

98,956

193,416

29.8

%

20,411

Loss from operations

(29,602

)

(38,199

)

(48,211

)

(82,134

)

(198,146

)

(48,375

)

(50,273

)

(98,648

)

(40.8

%)

(12,074

)

% Margin

-47.4

%

-58.9

%

-60.2

%

-104.9

%

-69.4

%

-58.6

%

-55.8

%

-57.1

%

Total other income (expense)

356

(281

)

10,404

8,311

18,790

5,882

4,780

10,662

1421.6

%

5,061

Loss from continuing operations before income taxes

(29,246

)

(38,480

)

(37,807

)

(73,823

)

(179,356

)

(42,493

)

(45,493

)

(87,986

)

(24.0

%)

(7,013

)

Income taxes (benefit)

(1,428

)

2,700

(22,546

)

(24,135

)

(45,409

)

(353

)

(5,291

)

(5,644

)

(559.6

%)

(7,991

)

Net loss from continuing operations

(27,818

)

(41,180

)

(15,261

)

(49,688

)

(133,947

)

(42,140

)

(40,202

)

(82,342

)

3.5

%

978

Earnings from discontinued operations, net of tax

24,803

61,803

1,071,661

4,227

1,162,494

-

-

-

(249.2

%)

(61,803

)

Net earnings (loss)

(3,015

)

20,623

1,056,400

(45,461

)

1,028,547

(42,140

)

(40,202

)

(82,342

)

(2017.4

%)

(60,825

)

Diluted earnings (loss) per share

(0.04

)

0.27

13.65

(0.67

)

13.71

(0.61

)

(0.59

)

(1.21

)

(2195.1

%)

(0.86

)

Diluted loss per share continuing operations

(0.36

)

(0.53

)

(0.20

)

(0.73

)

(1.79

)

(0.61

)

(0.59

)

(1.21

)

(17.2

%)

(0.06

)

Some earnings (loss) per share amounts may not add due to rounding.
LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP EPS (1)
(Unaudited)
(Dollars in thousands, except per share amounts)
06/30/18 09/30/18 12/31/18 03/31/19 FY2019 06/30/19 09/30/19 FY2020
Loss from continuing operations before income taxes

(29,246

)

(38,480

)

(37,807

)

(73,823

)

(179,356

)

(42,493

)

(45,493

)

(87,986

)

Income taxes (benefit)

(1,428

)

2,700

(22,546

)

(24,135

)

(45,409

)

(353

)

(5,291

)

(5,644

)

Net loss from continuing operations

(27,818

)

(41,180

)

(15,261

)

(49,688

)

(133,947

)

(42,140

)

(40,202

)

(82,342

)

Earnings from discontinued operations, net of tax

24,803

61,803

1,071,661

4,227

1,162,494

-

-

-

Net earnings (loss)

(3,015

)

20,623

1,056,400

(45,461

)

1,028,547

(42,140

)

(40,202

)

(82,342

)

Earnings (loss) per share:
Basic

(0.04

)

0.27

13.65

(0.67

)

13.71

(0.61

)

(0.59

)

(1.21

)

Diluted

(0.04

)

0.27

13.65

(0.67

)

13.71

(0.61

)

(0.59

)

(1.21

)

Excluded items:
Purchased intangible asset amortization (cost of revenue)

5,970

3,548

3,359

2,981

15,858

3,123

5,369

8,492

Non-cash stock compensation (cost of revenue and operating expenses)

17,798

17,667

26,082

41,175

102,722

18,630

23,354

41,984

Accelerated depreciation (cost of revenue and operating expenses)

-

-

1,959

1,853

3,812

1,906

1,663

3,569

Restructuring and merger charges (gains, losses, and other)

1

489

5,043

14,400

19,933

2,276

45

2,321

Separation and transformation costs (general and administrative)

-

2,122

700

(705

)

2,117

-

-

-

Total excluded items, continuing operations

23,769

23,826

37,143

59,704

144,442

25,935

30,431

56,366

Loss from continuing operations before income taxes and excluding items

(5,477

)

(14,654

)

(664

)

(14,119

)

(34,914

)

(16,558

)

(15,062

)

(31,620

)

Income taxes (benefit)

(1,078

)

(3,790

)

(2,941

)

(5,155

)

(12,964

)

(216

)

190

(26

)

Non-GAAP net earnings (loss) from continuing operations

(4,399

)

(10,864

)

2,277

(8,964

)

(21,950

)

(16,342

)

(15,252

)

(31,594

)

Non-GAAP earnings (loss) per share from continuing operations:
Basic

(0.06

)

(0.14

)

0.03

(0.13

)

(0.29

)

(0.24

)

(0.23

)

(0.46

)

Diluted

(0.06

)

(0.14

)

0.03

(0.13

)

(0.29

)

(0.24

)

(0.23

)

(0.46

)

Basic weighted average shares

76,935

77,448

77,398

68,299

75,020

68,906

67,684

68,295

Diluted weighted average shares

76,935

77,448

77,398

68,299

75,020

68,906

67,684

68,295

Some totals may not add due to rounding

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP EXPENSES (1)

(Unaudited)

(Dollars in thousands)

06/30/18

09/30/18

12/31/18

03/31/19

FY2019

06/30/19

09/30/19

FY2020

Expenses, continuing operations:
Cost of revenue

23,654

24,466

34,838

37,760

120,718

36,426

41,460

77,886

Research and development

16,970

16,940

20,469

31,318

85,697

23,722

26,445

50,167

Sales and marketing

33,323

35,940

40,054

49,223

158,540

43,144

45,204

88,348

General and administrative

18,125

25,176

27,828

27,749

98,878

25,318

27,262

52,580

Gains, losses and other items, net

1

489

5,043

14,400

19,933

2,276

45

2,321

Excluded items:
Purchased intangible asset amortization (cost of revenue)

5,970

3,548

3,359

2,981

15,858

3,123

5,369

8,492

Non-cash stock compensation (cost of revenue)

712

782

1,052

2,163

4,709

755

1,060

1,815

Non-cash stock compensation (research and development)

4,341

3,745

5,945

14,193

28,224

4,451

6,346

10,797

Non-cash stock compensation (sales and marketing)

9,920

9,854

9,460

14,736

43,970

8,920

9,758

18,678

Non-cash stock compensation (general and administrative)

2,824

3,286

9,625

10,083

25,818

4,504

6,190

10,694

Accelerated depreciation (cost of revenue)

-

-

1,527

1,445

2,972

1,487

1,245

2,732

Accelerated depreciation (general and administrative)

-

-

432

408

840

419

418

837

Restructuring and merger charges (gains, losses, and other)

1

489

5,043

14,400

19,933

2,276

45

2,321

Separation and transformation costs (general and administrative)

-

2,122

700

(705)

2,117

-

-

-

Total excluded items

23,768

23,826

37,143

59,704

144,441

25,935

30,431

56,366

Expenses, continued operations excluding items:
Cost of revenue

16,972

20,136

28,900

31,171

97,179

31,061

33,786

64,847

Research and development

12,629

13,195

14,524

17,125

57,473

19,271

20,099

39,370

Sales and marketing

23,403

26,086

30,594

34,487

114,570

34,224

35,446

69,670

General and administrative

15,301

19,768

17,071

17,963

70,103

20,395

20,654

41,049

Gains, losses and other items, net

-

-

-

-

-

-

-

-

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP OPERATING LOSS GUIDANCE (1)

(Unaudited)

(Dollars in thousands)

For the year ending

March 31, 2020

Low Range

High Range

Revenues

$

376,000

$

381,000

GAAP loss from operations

(180,000

)

(175,000

)

Excluded items:
Purchased intangible asset amortization

19,000

19,000

Accelerated depreciation

4,000

4,000

Non-cash stock compensation

87,000

87,000

Gains, losses and other items, net

2,000

2,000

Total excluded items

112,000

112,000

Non-GAAP loss from operations

$

(68,000

)

$

(63,000

)

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. For a detailed explanation of the adjustments made to comparable GAAP measures, the reasons why management uses these measures, the usefulness of these measures and the material limitations on the usefulness of these measures, please see Appendix A.

APPENDIX A

LIVERAMP HOLDINGS, INC. AND SUBSIDIARIES
Q2 FISCAL 2020 FINANCIAL RESULTS
EXPLANATION OF NON-GAAP MEASURES AND OTHER KEY METRICS

To supplement our financial results, we use non-GAAP measures which exclude certain acquisition related expenses, non-cash stock compensation and restructuring charges. We believe these measures are helpful in understanding our past performance and our future results. Our non-GAAP financial measures and schedules are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated GAAP financial statements. Our management regularly uses these non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. These measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is also based in part on the performance of our business based on these non-GAAP measures.

Our non-GAAP financial measures, including non-GAAP earnings per share, income from operations and adjusted EBITDA reflect adjustments based on the following items, as well as the related income tax effects when applicable:

Purchased intangible asset amortization: We incur amortization of purchased intangibles in connection with our acquisitions. Purchased intangibles include (i) developed technology, (ii) customer and publisher relationships, and (iii) trade names. We expect to amortize for accounting purposes the fair value of the purchased intangibles based on the pattern in which the economic benefits of the intangible assets will be consumed as revenue is generated. Although the intangible assets generate revenue for us, we exclude this item because this expense is non-cash in nature and because we believe the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding our operational performance.

Non-cash stock compensation: Non-cash stock compensation consists of charges for associate restricted stock units, performance shares and stock options in accordance with current GAAP related to stock-based compensation including expense associated with stock-based compensation related to unvested options assumed in connection with our acquisitions. As we apply stock-based compensation standards, we believe that it is useful to investors to understand the impact of the application of these standards to our operational performance. Although stock-based compensation expense is calculated in accordance with current GAAP and constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense that typically requires or will require cash settlement by us and because such expense is not used by us to assess the core profitability of our business operations.

Restructuring charges: During the past several years, we have initiated certain restructuring activities in order to align our costs in connection with both our operating plans and our business strategies based on then-current economic conditions. As a result, we recognized costs related to termination benefits for associates whose positions were eliminated, lease and other contract termination charges, and leasehold improvement write offs. These items, reported as gains, losses, and other items, net, are excluded from non-GAAP results because such amounts are not used by us to assess the core profitability of our business operations.

Separation and transformation costs: In the prior year, we incurred transaction support expenses and system separation costs related to the Company's announced evaluation of strategic options for its Marketing Solutions (AMS) business. Our criteria for excluding separation and transformation expenses from our non-GAAP measures is as follows: 1) projects are discrete in nature; 2) excluded expenses consist only of third-party consulting fees that we would not incur otherwise; and 3) we do not exclude employee related expenses or other costs associated with the ongoing operations of our business. We believe excluding these items from our non-GAAP financial measures is useful for investors and provides meaningful supplemental information.

Accelerated depreciation: In the current year we are excluding depreciation costs associated with the reduced useful life of certain IT equipment in connection with the Company's migration to a cloud-based data center solution. This migration is part of our AMS separation strategy. These costs are excluded from our non-GAAP results because of the short-term nature of the incremental expenses and such amounts are not used by us to assess the core profitability of our business operations.

Other key metrics may be defined as:

Subscription net retention: The current period subscription revenue (net) from customers who have been on the platform for one year or more, divided by the prior year quarter subscription revenue (net), inclusive of upsell, churn and downsell.

Platform net retention: The current period subscription and marketplace revenue (net) from customers who have been on the platform for one year or more, divided by the prior year quarter subscription and marketplace revenue (net), inclusive of upsell, churn and downsell.

Annualized recurring revenue (ARR): The ending MRR (last month of quarter), annualized. Recurring revenue is fixed and contracted subscription revenue and does not include any variable or non-recurring revenue amounts.

Our non-GAAP financial schedules are:

Non-GAAP EPS, Non-GAAP Income from Operations, and Non-GAAP expenses: Our Non-GAAP earnings per share, Non-GAAP income from operations, and Non-GAAP expenses reflect adjustments as described above, as well as the related tax effects where applicable.

Adjusted EBITDA: Adjusted EBITDA is defined as net income from continuing operations before income taxes, other expenses, depreciation and amortization, and including adjustments as described above. We use Adjusted EBITDA to measure our performance from period to period both at the consolidated level as well as within our operating segments and to compare our results to those of our competitors. We believe that the inclusion of Adjusted EBITDA provides useful supplementary information to and facilitates analysis by investors in evaluating the Company's performance and trends. The presentation of Adjusted EBITDA is not meant to be considered in isolation or as an alternative to net earnings as an indicator of our performance.

Free Cash Flow to Equity: To supplement our statement of cash flows, we use a non-GAAP measure of cash flow to analyze cash flows generated from operations. Free cash flow to equity is defined as operating cash flow less cash used by investing activities (excluding the impact of cash paid in acquisitions), less required payments of debt, and excluding the impact of discontinued operations. Management believes that this measure of cash flow is meaningful since it represents the amount of money available from continuing operations for the Company's discretionary spending after funding all required obligations including scheduled debt payments. The presentation of non-GAAP free cash flow to equity is not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.

LiveRamp Investor Relations

Lauren Dillard, (650) 372-2242

[email protected]

ERAMP

Source: LiveRamp, Inc.

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